How does output price risk influence agricultural energy consumption? Evidence from China's lychee market

Agricultural price risk plays a critical role in shaping farmer behaviours. However, existing studies offer little evidence of how output price risk influences energy-related behaviours in agricultural production. In this study, we investigate the impact of output price risk on agricultural energy consumption by leveraging nationally representative data of lychee farmers with daily prices across the supply chain in China. Our findings robustly demonstrate that an increase in output price risk positively affects agricultural households' energy expenditures. Additionally, we find that the effects of output price risk are more salient among samples of diesel consumption, small-scale households, and less-educated households. Furthermore, the mechanism analysis documents that output price risk significantly increases the likelihood of participating in the non-farm occupation, as well as adopting energy-powered production technologies and productive fixed assets.